Commissioners approve purchase contract with private company for Carteret water system

Carteret County commissioners Chuck Shinn, far right, and Bob Cavanaugh, second from right, cast their dissenting votes on a motion to execute the contract with Carolina Water Service of North Carolina for purchase of the county-owned water system. From left, commissioners Jimmy Farrington, Robin Comer and Ed Wheatly, along with Mark Mansfield, not pictured, voted in favor of the motion, which carried 4-2. Commissioner Chris Chadwick was absent. (Elise Clouser screenshot)

BEAUFORT — In a 4-2 vote, the Carteret County Board of Commissioners Monday approved the execution of a contract with Carolina Water Service of North Carolina to move forward the sale of the county-owned and maintained water system to the private company.

With few agenda items for the board to consider during its regular meeting Monday evening, the water sale was the main topic of discussion among commissioners. The meeting took place in the commissioners’ boardroom of the administration complex in Beaufort, with Commissioner Mark Mansfield attending via Zoom and Commissioner Chris Chadwick absent.

Last month, the board of commissioners voted 4-3 to accept an offer from Carolina Water Service to purchase the utility for $9.5 million. An asset purchase agreement hadn’t been finalized at the time of the vote, but county attorney Rob Wheatly reported Monday, after months of negotiations, the contract was finally ready. 

“The contract itself has been negotiated, we’ve been negotiating the contract for approximately three months, four months, and what we have before you is the final product,” Mr. Wheatly said.

The contract, a copy of which is included in the agenda packet for the October meeting, does not include a provision that Carolina Water maintain existing water rates for the first five years of service, as commissioners originally wanted. Instead, the N.C. Utilities Commission will decide rates when the matter comes before that agency for final sign off.

“Once (the contract) is executed, Carolina Water will make an application to the N.C. Utilities Commission for this sale to go through,” assistant county manager Gene Foxworth said.

As part of a due diligence period required for the sale, Mr. Foxworth continued, three separate appraisals will be completed on the water system to determine its fair market value and condition of the assets. ­One appraisal is to be carried out by the county, another will be done by Carolina Water Service, and the N.C. Utilities Commission will conduct the third.

The county anticipates the whole process will take nine to 12 months, or possibly longer, to complete before the sale is finalized and the water system is officially handed over.

Several members of a grassroots group that opposed the sale spoke during the general public comment period of Monday’s meeting to read off a list of outstanding questions they had for commissioners related to the water system. The speakers expressed frustration over a perceived lack of dialogue on the issue, but some commissioners insisted they and county staff had been transparent and answered residents’ questions throughout the process.

“The majority of these (questions) have been answered a couple times,” Robin Comer said during the commissioners’ comments portion of the meeting. “…We had public information meetings here where there was interaction with us and the public, the manager went over everything in detail and explained 90 percent of this stuff.”

Despite how outspoken some residents were in opposition to the sale from the beginning, commissioners said they heard strong feedback from many other county water customers when the board raised rates by 95% in June in a last-ditch effort to keep the system from being labeled financially distressed.

That was done because the county-owned water system, which serves around 1,200 customers within a special water district encompassing areas roughly along the Highway 101 corridor north of Beaufort, was essentially being subsidized by a special tax that applied to everyone within the district regardless if they were hooked up to the system. The 5.5-cent special tax was eliminated as the 95% rate increase was imposed.

“We never heard any comment that was telling us to sell the system until after we raised the rate,” Commissioner Bob Cavanaugh noted. “After we raised the rate then it was just a tidal wave of complaints…I was really kind of discouraged by that, where were all these people during the discussions early on.”

In response, commissioners voted last month to provide some relief to those water customers by lowering the rates 25%. A related budget amendment transferring $150,000 from a special water district revenue fund to cover the difference was adopted as part of this month’s consent agenda.

Other than Commissioner Chadwick, who was absent, commissioners voted in line with their decisions last month, with commissioners Jimmy Farrington, Ed Wheatly, Mr. Comer and Mr. Mansfield in favor of approving the contract and Mr. Cavanaugh and Chuck Shinn voting against it.

 

Contact Elise Clouser at elise@thenewstimes.com; by phone at 252-726-7081 ext. 229; or follow on Twitter @eliseccnt.

(7) comments

mcmlxv

If we are selling the water system because it doesn't make money perhaps we could privatize our entire county government also. They spend millions more than they earn every year and always come back for more.

drewski

Zoom in on that photo, whom exactly do those folks represent? The census data is out carteret county is not lily white, nor aged. Read the article carefully. They wanted to get rid of water system, they created a crises by killing the special tax district that paid for it. Then they slammed the users with a huge bill increase. This caused a great hue and cry, thereby creating the required "mandate from the people" to sell it.

Their actions suggest they can and will do exactly as they want, imput from citizens is a mild annoyance to be briefly endured.

Must be nice to be local royalty.

All hail the hereditary kings of carteret.

David Collins

By selling county services to private companies you are allowing private individuals to pretty much own the county . They will totally call the shots and the public will have nothing to say about anything . State regulations ? As we have seen before , it will take years for them to wake up and even think about interceding . If at all .

Yes , it could get a whole lot worse so be careful what you wish for .

Not a done deal yet till the ink dries on the bill of sale .

Sleepwalker

Mcm….boom there it is!

noitall

A giveaway. Under current IRS depreciation rule the new owners will pay on taxes for the foreseeable futer. NO INCOME TAX.. So why not sell everything.

Sandman

Another example of government greed and self righteousness. Spend a whole lot of time pestering the citizens to help them get elected for their position and then turn around and turn deaf ears to those same very citizens. They don’t care because as long as they are getting their money that’s all they care about. Those people do not give 2 cents on what the people think. Way to go guys.

noitall

Waterworks value would be three times earnings plus assets. I worked d for a large conglomerate for 15 years and was on the acquisition committee. This rule of thumb was reliable. Raising rates 95% would increase sales price by increasing earnings but this would be quickly recovered in reduced tax. Accelerated depreciation by the new owner would eliminator income for tax purposes.Hard assets, good will, customer lists, and so on can be added to the total depreciation to be allowed, Understand that depreciation is considered an expense and can offset net taxable income. This started with Reaganomics and is the life blood of corporate growth in the tec sector. Not a bad thing because a startup can generate cash to fill the startup pipelines. In this case this it is just a giveaway. County gets zilch. Lets subpoena the e-mails and get to the truth.

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